Getting to Product Market Fit - An Overview of Customer Discovery & Validation

Customer Discovery & Validation Jason @Evanish AKA - The First Two Steps to the Epiphany: Getting to Product-Market Fit

Today’s Topics
Customer Discovery Overview
Customer Development Interview Process
Customer Validation Overview

Why Customer Development
Move faster
Reduce risk
Bring process to chaos
Stay in tune with customers
Replace HiPPO & opinions with data
Discover the best market opportunities

The Core: Learn-Build-Measure

Customer Discovery

Who is Your Customer? Phase 1 – State Hypothesis Phase 4 – Verify Phase 3 – Test Product Concept Phase 2 – Test Problem Hypothesis

Map Your Ecosystem
Who are the entities in your business?
Connect the entities based on the flow of $$
How does the product move through channels to meet users?

The Hypothesis : C-P-S
C ustomer
Who is using your product?
P roblem
What problem do they have?
S olution
How will you solve the problem?
Be Specific. It’s better to be wrong than vague.

The Intermediate MVP
Map out the basics of your MVP based on the solutions from C-P-S
Identify the riskiest parts & test them
This is before you build anything…just map out what you think is the solution
BUILD

Helping you map it: The Lean Canvas

Why all this work?
Save Time and Money by discovering early on if something won’t work.
Make course adjustments before you build a large product.

Exit Goals for Customer Discovery
You’ve identified a problem a customer wants solved.
Your product solve the customer’s needs.
You believe you have a viable and profitable business model.
You feel you’ve learned enough to go out and sell.

The Customer Development Interview
Learn in detail here: http://greenhornconnect.com/blog/how-structure-and-get-most-out-customer-development-interviews

The Structure – 1. Person
Who are they? What’s their role?
How is your budget handled?
How do you find new products for work?
How much time do you spend on [Task X]?
Goal: Get a baseline background of the person you’re talking to. Be broad. Learn about them and their role in your industry.

The Structure – 2. Problems
NOT about the problems you think they have.
What are your top 3 challenges you face in your job related to [industry X]?
If you could wave a magic wand…what would the solution be?
Goal: Get them to say the problem you want to solve is a problem they have (prefer unprompted) Learn about the problems they recognize first.

The Structure – 3. Solution
“ That’s interesting” = Kiss of Death.
If they’re not anxious to use right away, they’re not a key target.
Read body language, voice inflection and energy level for signals of interest.
Best reaction is actually following through after the meeting or calls.
Now you tell them about your product concept. Goal: Discover if they’re interested in your solution and gather feedback.

Tips for making the most of Interviews
Take good notes.
Involve other team members.
Be Conversational.
Go off script.
Ask to see any MVPs they’ve made/use.
If they’re excited about something, ask if they’ll pay for it.
Show them mockups or early concepts if you have them and pay attention to their reactions/feedback.
Always Follow up.
End with an ask.
Be open to new problems and opportunities!
Summarize and review your notes with your team.

Where do you find people to interview? 10 – 20% Response Rate

The Best Place to Find Candidates: 30-40% Response Rate

Help not Sales

Manage Expectations
Only 10-20% of those you reach out to will respond.
Getting started is the hardest, then you can find the channels.
Different target customers often are found in different channels.

Now what?
Interview in groups of 8-10 people per customer type.
Summarize notes and review with others.
Look for common patterns matching C-P-S (Customer – Problem – Solution).
Compare to your high level metrics to see if anecdotes match data.
Iterate if there’s no match.

Customer Validation

Can You Sell It? Phase 1 – Get Ready to Sell Phase 4 – Verify Phase 3 – Develop Positioning Phase 2 – Sell to Visionary Customers

Not time for Glengarry Yet… You’re still in learning mode. … about what customers will buy and how!

Break Down Your Sales Road Map
Who influences a sale?
Who recommends a sale?
Who is the decision maker?
Who is the economic buyer?
Who is the saboteur?
What is the budget for purchasing your type of product?
How many calls does it take to make a sale
What is the profile of an early customer?

The Gospel According to Blank – Phase 1 : Get Ready to Sell Goal: Take what you learned from Customer Discovery and apply to development of Sales Process

Map out the Food Chain of your Sale

Exercise: Make Your Food Chain
Who is the end user?
Who is the purchase decision maker?
Who seeks out a solution like Yours?
What are alternative channels?

Find out how to (reliably) get your foot in the door…
At what level do you want to enter?
How many people on the organizational map need to say yes?
Does each department perceive the problem the same way?
In what order do you need to call on people?
Who can derail the sale?

The Gospel According to Blank – Phase 2: Sell to Visionary Customers Goal: Get someone to Pay for your product and learn how to repeat the process.

Free != Customer Customer =

Build Your Sales Roadmap What steps are involved in your sales process?

The Gospel According to Blank – Phase 3: Develop Positioning Goal: Based on problem and sales lessons, optimize positioning for your product & company.

Positioning
Speak the language of your customer
Written by those that interact directly with the customer
Verify with Product team to ensure what’s built meets expectations set

The Gospel According to Blank – Phase 4: Verify Goal: Verify all the work you’ve put into Customer Validation to iterate or move onto Customer Creation.

Productive Paranoia Ask Yourself: Is your business *really* on track?

Questions to Ask…
Product:
Are you repeatedly losing any deals? Why?
Are customers satisfied? What else do they expect?
Are you building the right features?
Were there any pricing issues? Did you lose customers on pricing?
Sales:
Can you verify the sales process and accurately project its success rate?
Can you realistically map your sales pipeline?
Are you closing deals?

More Questions to Ask…
Channel:
Did you factor in the channel costs to the overall costs of your product?
How do various channels affect the sales time?
What does your sales force look like?
Business Model:
Based on known factors, how profitable is the business?
Will costs be the same as you grow?
How much funding do you need to reach profitability?

Customer Validation Wrap Up
To Exit means you’ve
Proven you found a Customer Problem
Found earlyvangelists that will pay you
Found a repeatable and scalable sales process
Demonstrated a viable business model

Customer Development in a Nutshell
Common Sense + Diligent Process + Thought =

Questions?

Further Reading - Books The Lean Startup By Eric Ries Great high level overview of all the principles of a Lean Startup. The Entrepreneur ’ s Guide to Customer Development By Patrick Vlaskovits & Brant Cooper The Cliff Notes for Lean Startups; a must read for everyone on your team. The Four Steps to the Epiphany By Steve Blank The Bible of Lean Startups. Tough read, but excellent content. Running Lean By Ash Maurya A practical guide to build a great lean startup from the creator of the lean canvas. These books, especially 4 Steps, were key sources in creating this presentation & my learning of this methodology

Further Reading – Lean Related Blogs
Steve Blank , Godfather of Lean Startups
Ash Maurya , Practitioner and action-oriented
Dave McClure , Investor, advisor, badass
Cindy Alvarez , Product manager at Kissmetrics
Andrew Chen , Metrics and Customer acquisition expert

Further Reading – Helpful Presentations
The Customer Development Methodology
by Steve Blank
Startup Metrics are for Pirates
by Dave McClure
The Top 10 Reasons to not be a Lean Startup
By Patrick Vlaskovits & Brant Cooper
20 Ways not to build stuff
by Cindy Alvarez
How to recruit and interview potential customers
by Elizabeth Yin
Building Your Customer Development Plan
by Cindy Alvarez
Minimum Desirable Product: Customer Development for the “ Winner Take All ” Web
by Andrew Chen

Contact me…I’m happy to help
On Twitter: @Evanish
Other sites: About.me /Evanish
Email: [email_address]
… if I don’t have the answer, I’ll work with you to find it.

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Getting to Product Market Fit - An Overview of Customer Discovery & Validation

by Jason Evanish on Jan 18, 2012

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